Fifteen-dollar-an-hour minimum wage is so yesterday.
In an op-ed in the New York Times, Ginia Bellafante points to a study showing that a $33-per-hour minimum wage might be needed in New York City, saying that’s the amount necessary — about $69,000 extrapolated out over a year’s income — for a single parent with two school-aged children to live a decent quality of life in the Big Apple.
“In many, many cases, a $15 hourly wage will not bring a family, or even a single person, to an adequate living standard,” she wrote. “That hardly means the fight was worthless; it just means the war is ongoing.”
The $15-an-hour wage also leads to job cuts and losses. After New York City raised its minimum wage to that figure on Jan. 1, the bloodletting quickly began.
Jon Bloostein, who operates six restaurants in New York City and employs several hundred people, told CBS News that the increased hourly pay put “immense” pressure on his payroll.
“We lost control of our largest controllable expense,” he said. “So in order to live with that and stay in business, we’re cutting hours.”
Bloostein also increased his menu prices and now uses a sign — rather than a host or hostess — to direct patrons to seats.
“[It] will cost more to dine out,” Bloostein said. “It’s not great for labor, it’s not great for the people who invest in or own restaurants, and it’s not great for the public.”
In the fallout from the minimum wage hike in NYC, a survey from the city’s hospitality alliance found that three-quarters of restaurants are cutting hours and half of them are eliminating jobs.
Jonathan Miltimore, managing editor of the Foundation for Economic Freedom, said politicians can’t seem to grasp that such laws hurt poor people more than they help them, as higher-skilled workers are the ones who are often retained while those who can’t afford to pay for the training or education they need are left unemployed.
The sentiment is all the more timely given an effort by Democrats in the U.S. House proposing legislation that would more than double the federally mandated minimum wage to $15 an hour, even if that effort has zero chance of ever becoming law.
In truth, such bills are really more pandering to a political base than an effort at substantive legislation.
“Until voters recognize that politicians have incentives that are often quite different from their own, we’re likely to continue to see harmful legislation of this kind,” Miltimore wrote.
Donald J. Boudreaux, professor of economics and Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center, points out that wages aren’t based on need, but rather on productivity. Why would someone employ you if you didn’t provide value to the job above what someone is paying you in wages? Such a generous attitude would put a lot of businesses out of — well — business.
“Government requirements that workers be paid an amount greater than the value of what they produce throw workers who cannot produce that amount of value out of work,” Boudreaux wrote.
He hypothesized that if workers had to directly sell their goods or services to consumers — a loaf of bread here, a haircut there — at higher prices to generate hourly incomes of at least $33 they would actually make less money because consumers would purchase so few of those goods and services.
“The fact that most income-earners sell their outputs to the public indirectly, through their employers, does nothing to change the reality that forcing workers to charge for their services more than those services are worth puts workers out of jobs,” Boudreaux wrote.
It’s just another way of looking at why government-mandated wage controls are folly when the free market is more than capable of establishing a balance between incomes and costs of products.